-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, MDmPdgBnQgznSrD8lxFr0BvoY1CQJF6pwV3mHzFo1JknRdNNXATo54L43gtg0VKD VWxtkoFLqZ1d38dDT4UXOw== 0000916641-94-000149.txt : 19941207 0000916641-94-000149.hdr.sgml : 19941207 ACCESSION NUMBER: 0000916641-94-000149 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19941030 FILED AS OF DATE: 19941206 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITHFIELD FOODS INC CENTRAL INDEX KEY: 0000091388 STANDARD INDUSTRIAL CLASSIFICATION: MEAT PACKING PLANTS [2011] IRS NUMBER: 520845861 STATE OF INCORPORATION: DE FISCAL YEAR END: 0427 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02258 FILM NUMBER: 94563547 BUSINESS ADDRESS: STREET 1: 501 N CHURCH ST CITY: SMITHFIELD STATE: VA ZIP: 23430 BUSINESS PHONE: 8043574321 MAIL ADDRESS: STREET 1: 501 N CHURCH STREET CITY: SMITHFIELD STATE: VA ZIP: 23430 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY EQUITIES CORP DATE OF NAME CHANGE: 19710221 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY REAL ESTATE TRUST DATE OF NAME CHANGE: 19661113 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended October 30, 1994 Commission File Number 0-2258 SMITHFIELD FOODS, INC. 501 North Church Street Smithfield, Virginia 23430 (804) 357-4321 Delaware 52-0845861 (State of Incorporation) (I.R.S. Employer Identification Number) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Shares outstanding Class at December 2, 1994 Common Stock, $.50 16,387,026 par value per share 1-11 SMITHFIELD FOODS, INC. CONTENTS Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets - October 30, 1994 and May 1, 1994 3-4 Consolidated Statements of Operations - 13 Weeks Ended October 30, 1994 and October 31, 1993 and 26 Weeks Ended October 30, 1994 and October 31, 1993 5 Consolidated Statements of Cash Flows - 26 Weeks Ended October 30, 1994 and October 31, 1993 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 8-10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. 10 2-11 PART I. FINANCIAL INFORMATION SMITHFIELD FOODS, INC. CONSOLIDATED BALANCE SHEETS October 30, May 1, (In thousands) 1994 1994 ASSETS (unaudited) Current assets: Cash $ 11,898 $ 12,350 Accounts receivable less allowances of $487 and $407 72,393 60,586 Inventories 143,370 119,269 Advances to joint hog production arrangements 9,090 20,178 Prepaid expenses and other current assets 15,500 13,946 Total current assets 252,251 226,329 Property, plant and equipment 377,825 330,133 Less accumulated depreciation (132,991) (124,112) Net property, plant and equipment 244,834 206,021 Other assets: Cost in excess of net assets acquired less accumulated amortization of $1,555 and $1,411 7,449 4,385 Investments in and advances to partnerships 24,310 10,672 Other 5,490 4,872 Total other assets 37,249 19,929 $ 534,334 $ 452,279 See accompanying notes to consolidated financial statements. 3-11 SMITHFIELD FOODS, INC. CONSOLIDATED BALANCE SHEETS October 30, May 1, (In thousands) 1994 1994 LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) Current liabilities: Notes payable $ 68,291 $ 52,135 Current portion of long-term debt and capital lease obligations 9,440 9,655 Accounts payable 55,081 48,017 Accrued expenses and other current liabilities 36,018 31,840 Income taxes payable 1,217 3,153 Total current liabilities 170,047 144,800 Long-term debt and capital lease obligations 165,087 118,942 Other noncurrent liabilities 22,638 23,587 Series B 6.75% cumulative convertible redeemable preferred stock, $1.00 par value, 1,000 shares authorized, issued and outstanding 10,000 10,000 Stockholders' equity: Preferred stock, $1.00 par value, authorized 1,000,000 shares - - Common stock, $.50 par value, authorized 25,000,000 shares; issued 16,824,026 and 16,713,126 shares 8,412 8,357 Additional paid-in capital 49,686 47,964 Retained earnings 116,107 106,272 Treasury stock, at cost, 437,000 shares (7,643) (7,643) Total stockholders' equity 166,562 154,950 $ 534,334 $ 452,279 See accompanying notes to consolidated financial statements. 4-11 SMITHFIELD FOODS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) 13 Weeks 13 Weeks 26 Weeks 26 Weeks Ended Ended Ended Ended (In thousands, except per share data) Oct. 30, 1994 Oct. 31, 1993 Oct. 30, 1994 Oct. 31, 1993 Sales $ 385,387 $ 354,873 $ 728,042 $ 654,103 Costs and expenses: Cost of sales 323,613 309,427 618,910 570,368 Selling, general and administrative 40,906 33,497 76,613 63,818 Depreciation 4,811 6,823 9,510 12,574 Interest 3,410 3,544 6,601 6,214 Income before income taxes 12,647 1,582 16,408 1,129 Income taxes 4,845 659 6,236 575 Net income $ 7,802 $ 923 $ 10,172 $ 554 Net income available to common stockholders $ 7,633 $ 754 $ 9,834 $ 216 Net income per share $ .45 $ .04 $ .58 $ .01 Weighted average common shares outstanding 17,081 16,737 17,034 16,731
See accompanying notes to consolidated financial statements. 5-11 SMITHFIELD FOODS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 26 Weeks 26 Weeks Ended Ended (In thousands) Oct. 30, 1994 Oct. 31, 1993 Cash flows from operating activities: Net income $ 10,172 $ 554 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 10,404 13,249 Increase in accounts receivable (12,052) (19,098) Increase in inventories (24,101) (43,064) Increase in prepaid expenses and other current assets (1,310) (84) Increase in other assets (4,575) (667) Increase in other liabilities 8,357 13,901 Loss on sale of property, plant and equipment 553 99 Net cash used in operating activities (12,552) (35,110) Cash flows from investing activities: Capital expenditures (49,864) (14,201) Proceeds from sale of property, plant and equipment 987 629 Investments in and advances to partnerships, net (2,549) 6,650 Net cash used in investing activities (51,426) (6,922) Cash flows from financing activities: Net borrowings on notes payable 16,156 41,286 Proceeds from issuance of long-term debt and capital lease obligations 50,000 4,373 Principal payments on long-term debt and capital lease obligations (4,070) (3,540) Proceeds from exercise of stock options 872 102 Tax benefit from stock options exercised 906 53 Preferred dividends (338) (338) Net cash provided by financing activities 63,526 41,936 Net decrease in cash (452) (96) Cash at beginning of the period 12,350 3,079 Cash at end of period $ 11,898 $ 2,983 Supplemental disclosures of cash flow information: Cash payments during period: Interest (net of amount capitalized) $ 6,448 $ 5,742 Income taxes $ 6,320 $ 172 See accompanying notes to consolidated financial statements. 6-11 SMITHFIELD FOODS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) The Notes to Financial Statements included in Registrant's Annual Report for the fiscal year ended May 1, 1994 should be read in conjunction with the quarterly financial statements. (2) The financial information furnished herein is unaudited. The information reflects all adjustments (which included only normal recurring adjustments) which are, in the opinion management, necessary to a fair statement of the results of operations for the interim periods included in this report. (3) Inventories consist of the following: October 30, May 1, (In thousands) 1994 1994 Fresh and processed meats $ 109,425 $ 90,219 Livestock and manufacturing supplies 23,758 19,809 Other 10,187 9,241 $ 143,370 $ 119,269 (4) In the third quarter of fiscal 1994, the Registrant revised the estimated useful lives of certain assets. This change in accounting estimate reduced depreciation charges and increased net income by $1,934,000 and $1,180,000 ($.07 per share), respectively, in the second quarter of fiscal 1995, and reduced depreciation charges and increased net income by $3,868,000 and $2,398,000 ($.14 per share), respectively, in the first six months of fiscal 1995. 7-11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS 13 Weeks Ended October 30, 1994 - 13 Weeks Ended October 31, 1993 Sales in the second quarter of fiscal 1995 increased $30.5 million, or 8.6%, from the same quarter a year ago. The increase resulted from an 18.7% increase in sales tonnage offset by a 4.2% decrease in unit selling prices due to sharply lower live hog costs. The increase in sales tonnage was the result of an 18.9% increase in fresh pork tonnage combined with a 14.7% increase in processed meats tonnage. Cost of sales increased $14.2 million, or 4.6%, in the second quarter of fiscal 1995, reflecting increased sales tonnage offset by decreased raw material costs due to significantly lower live hog prices. Gross profit (sales less cost of sales) in the second quarter of fiscal 1995 increased by $16.3 million, or 35.9%, compared to the same quarter of fiscal 1994. This increase in gross profit resulted from higher margins on increased sales tonnage of both fresh pork and processed meats. Gross profit was adversely impacted by operations at Brown's of Carolina, Inc. ("Brown's") and Smithfield-Carroll's, the Registrant's hog production operations. Brown's and Smithfield-Carroll's generated an aggregate operating loss in the second quarter of fiscal 1995. Selling, general and administrative expenses increased $7.4 million, or 22.1%, in the second quarter of fiscal 1995. The increase reflected higher distribution and sales and marketing costs associated with the increased sales tonnage, higher storage costs associated with substantially increased inventories of hams for the fall holiday season, and increased compensation and administrative costs related to a build-up of support staff related to current and anticipated future growth of overall business activity. Depreciation expense decreased $2.0 million, or 29.5%, in the second quarter of fiscal 1995 from the corresponding period a year ago. The decrease reflected a revision in the estimated useful lives of certain assets offset by increased depreciation charges related to expansion at the Registrant's Bladen County plant and Brown's. The change in accounting estimate reduced depreciation charges and increased net income in the second quarter by $1.9 million and $1.2 million, respectively. Reflecting the factors discussed above, net income increased to $7.8 million in the second quarter of fiscal 1995 compared to net income of $.9 million in the same quarter of the prior fiscal year. 8-11 26 Weeks Ended October 30, 1994 - 26 Weeks Ended October 31, 1993 Sales in the first six months of fiscal 1995 increased $73.9 million, or 11.3%, from the same quarter a year ago. The increase resulted from a 17.2% increase in sales tonnage offset by a 4.7% decrease in unit selling prices due to sharply lower live hog costs. The increase in sales tonnage was the result of a 21.2% increase in fresh pork tonnage combined with a 9.9% increase in processed meats tonnage. Cost of sales increased $48.5 million, or 8.5%, in the first six months of fiscal 1995, reflecting increased sales tonnage offset by decreased raw material costs due to lower live hog prices. Gross profit (sales less cost of sales) in the first two quarters of fiscal 1995 increased by $25.4 million, or 30.3%, compared to the same period of fiscal 1994. This increase in gross profit resulted from higher margins on increased sales tonnage of both fresh pork and processed meats. Gross profit was adversely impacted by sharply lower profits at Brown's and Smithfield-Carroll's, the Registrant's hog production operations. Selling, general and administrative expenses increased $12.8 million, or 20.0%, in the first six months of fiscal 1995. The increase reflected higher distribution and sales and marketing costs associated with the increased sales tonnage, higher storage costs associated with substantially increased inventories of hams for the fall holiday season, and increased compensation and administrative costs related to a build-up of support staff related to current and anticipated future growth of overall business activity. Depreciation expense decreased $3.1 million, or 24.4%, in the first two quarters of fiscal 1995 from the corresponding period a year ago. The decrease reflected a revision in the estimated useful lives of certain assets offset by increased depreciation charges related to expansion at the Registrant's Bladen County plant and Brown's. The change in accounting estimate reduced depreciation charges and increased net income in the first six months by $3.9 million and $2.4 million, respectively. Reflecting the factors discussed above, net income increased to $10.2 million in the first six months of fiscal 1995 compared to net income of $.6 million in the same period of the prior fiscal year. 9-11 LIQUIDITY AND CAPITAL RESOURCES During the first six months of fiscal 1995, the Registrant's cash used in operating activities was $11.0 million, the result of seasonal increases in the level of inventories and accounts receivable associated with the fall holiday season. Traditionally, the Registrant builds large inventories of hams in the spring and summer months which are sold during the fall holiday season. Capital expenditures in the first six months totaled $49.9 million, consisting primarily of $34.5 million related to the construction of a rapid carcass chilling system, a new ham and loin conversion operation and additional hog coolers at the Bladen County plant, and $9.1 million related to additional hog production facilities at Brown's. The significant increases in the levels of accounts receivable and inventories were funded with $16.2 million in borrowings under existing lines of credit. During the period, the Registrant placed $50.0 million of three- year notes with a bank, secured by the Bladen County plant. The notes bear interest at a rate ranging from prime to three-quarters of a percentage point above prime. The note agreement requires that the Registrant prepay the loan with the proceeds of any new long-term financings. The proceeds from the private placement, which were received after the close of the quarter, were used to repay short-term borrowings under the Registrant's lines of credit and, accordingly, $50.0 million of notes payable were classified on the Registrant's balance sheet as long-term debt as of October 30, 1994. As of October 30, 1994, the Registrant had definitive commitments of approximately $25.3 million for the remainder of fiscal 1995, primarily related to improvements at the Bladen County plant and the construction of new hog production facilities at Brown's. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. A. Exhibits. Exhibit 11 - Computation of Net Income Per Share Exhibit 27 - Financial Data Schedule (electronically submitted) B. Reports on Form 8-K. None 10-11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SMITHFIELD FOODS, INC. /s/ Aaron D. Trub Aaron D. Trub Vice President, Secretary & Treasurer /s/ C. Larry Pope C. Larry Pope Controller Date: December 2, 1994 11-11 EX-11 2 COMPUTATION OF NET INCOME PER SHARE SMITHFIELD FOODS, INC. EXHIBIT 11 COMPUTATION OF NET INCOME PER SHARE Net income and the number of shares and common equivalent shares used in the computation of net income per share were computed as follows: 13 Weeks 13 Weeks 26 Weeks 26 Weeks Ended Ended Ended Ended Oct. 30, 1994 Oct. 31, 1993 Oct. 30, 1994 Oct. 31, 1993 Income (in thousands) Net income $ 7,802 $ 923 $ 10,172 $ 554 Dividends accumulated for Series B preferred stock (169) (169) (338) $ (338) Net income available to common stockholders $ 7,633 $ 754 $ 9,834 $ 216 Shares (in thousands) Weighted average shares: Outstanding 16,343 16,275 16,311 16,275 Net effect of dilutive stock options 738 462 723 456 Shares for computation 17,081 16,737 17,034 16,731 Net income per share $ .45 $ .04 $ .58 $ .01
EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS APR-30-1995 OCT-30-1994 11,898 0 72,880 487 143,370 252,251 377,825 132,991 534,334 170,047 165,087 8,412 10,000 0 158,150 534,334 385,387 385,387 323,613 323,613 0 80 3,410 12,647 4,845 7,802 0 0 0 7,802 .45 0
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